Saturday, July 06, 2013

Front-Loading Ference's Contract?

The structure of Ference's contract has yet to be released, but I would not be surprised to discover that the Oilers frontloaded the contract to the fullest extent possible, so as to increase Ference's "tradeability" in the later years, should they so desire. If everything goes to plan three years from now, both Klefbom and Nurse will be in the NHL, and along with Smid still under contract, it very well could be the case that Ference would fit outside Edmonton's top 6D. In that case, front-loading Ference's contract could increase his appeal to an acquiring team for the 2016/17 season.

One of the changes made to the new CBA was designed to limit the front-loading of contracts. Under Article 50.7, front-loaded contracts are only permitted to have the salary decrease, from year to year, by 35% of the 1st year's salary, while no year may have a wage less than 50% of the highest salaried year. The following chart is an example of the front-loading the Oilers could have theoretically* included in Ference's contract, while not running afoul of Article 50.7(a):

Year

Salary

Cap Hit

2013/14

$3,900,000.00

$3,250,000.00

2014/15

$3,900,000.00

$3,250,000.00

2015/16

$3,250,000.00

$3,250,000.00

2016/17

$1,950,000.00

$3,250,000.00

TOTAL

$13,000,000.00

$13,000,000.00

As you can see, there is still the potential for a decent sized drop by the time the contract reaches its 4th year. Given that there are benefits for both sides if the contract is front-loaded, I would not be surprised to see Ference's contract arranged something like the table above.

* This table is not perfectly optimized, in terms of the lowest possible 4th year salary allowable to the dollar, but it's close. I didn't have solver, so I derived this table via some quick trial and error, but it's close enough (within $50,000, I believe) to be illustrative of the kind of structure Edmonton could have constructed while complying with the CBA.